The local Indian rebar market has been gripped by extremely volatility in the past week, with prices surging in select major trading hubs, attributed by some to speculation, while showing sluggish trends in certain regional markets, creating confusion among market participants and an uncertain outlook, SteelOrbis learned from trade and industry circles on Tuesday, July 29.
Sources said that rebar trade prices have surged and gained INR 1,000/mt ($12/mt) to INR 44,100/mt ($508/mt) ex-Mumbai but have showed sluggish movement and remained unchanged week on week at INR 45,500/mt ($524/mt) ex-Chennai in the south.
A similar trend was reported in regional markets where rebar trade prices gained INR 1,700/mt ($20/mt) to INR 40,700/mt ($468/mt) ex-Raipur, but have been quoted unchanged at INR 39,800/mt ($458/mt) ex-Durgapur in the east.
According to the sources, the high volatility and diversity of prices across markets was a result of a combination of a few large buyers returning to the market and confirming a handful of large-volume transactions, with speculative distributors quick to seize the opportunity after prolonged sluggish conditions to “quote unrealistically high prices” even though not many trades were concluded at such high rates.
A section of the market did not even rule out possibilities of “over invoicing” (a practice of creating invoices inflating the price to create false financial statements showing exaggerated sales) by unscrupulous market intermediaries.
This section claimed price movement differences between various markets would not have been so sharp if price gains “truly reflected” a market revival based on fundamentals of demand and price.
“There are lot of unverifiable claims and counter-claims which have made market conditions murky. This kind of speculative volatility is not good for the market as it scares off actual buyers at a time when fundamental demand is as it is, very weak,” a Kolkata-based distributor said.
“However, situation will get cleared in a week. Speculative gains will not sustain and prices will fall back and the market will settle down,” he said.
$1 = INR 86.88